New registry makes it easier for regulators to spot the
mortgage world's con artists

By Michelle Singletary / The Color of Money

There are lots of proposed remedies to prevent another mortgage catastrophe like the
one we're going through now. Most of the suggestions I've seen won't fix the loopholes
that allowed so many borrowers to take on loans they couldn't afford. more stories like
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But there is one solution that may help stem fraud in the mortgage industry and reduce
the number of unscrupulous or unlicensed brokers and loan officers.

The Conference of State Bank Supervisors and the American Association of Residential
Mortgage Regulators have launched the Nationwide Mortgage Licensing System, to help state
officials keep track of individuals and companies. The system streamlines the regulatory
process by allowing state-licensed mortgage lenders, brokers, and loan officers to use one
form to apply for, amend, update, or renew their licenses online. The registry brings
uniformity and transparency to the mortgage industry.

Often, unsavory individuals and companies can continue their unlawful practices because
there are no uniform rules. What they are prohibited from doing in one state might be
allowed in another.

Clearly, this new registry won't catch people who choose to escape detection by not
applying for a license. But the database could be used by responsible lenders, brokers,
and eventually consumers to check whether someone who claims to have a state license to
arrange loans actually does.

With the mortgage registry, applicants have to disclose a great deal of information,
ranging from their Social Security number to any criminal or civil actions against them.
They also must provide fingerprints and identify affiliations with lenders, brokerages,
and title companies.

The database is also designed to track those who do business under various names.

"From this single record it allows the regulators to see the entity exactly the
same as other regulators," Matthews said.

What a great tool this will be once all the states participate. Imagine state
investigators being able to check the status of a questionable applicant nationwide
without having to search databases in 50-plus jurisdictions.

This uniform licensing source will be a crucial tool for regulators trying to determine
if someone is participating in an unlawful activity that got them banned from mortgage
activity in another state.

So far, seven states -Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York, and
Rhode Island - are participating. By year's end, 18 state agencies are scheduled to be
part of the system, although 42 state agencies representing mortgage regulators in 40
states have indicated their intent to come on board.

Matthews said he expects all 50 states, the District of Columbia, Guam, Puerto Rico,
and the Virgin Islands to be part of the registry in three to five years. By 2009,
consumers will have access to the database, he said.